How much can I get as a tax-free gift?

How much money can my father give me as a gift without paying tax on it?Corbie, Peterhead, Scotland.

Cash gift: How much can my father give me tax-free?

Laura Howard, of This is Money, replies: If you are gifted money then you will not have to pay income tax on the sum.

Your father can gift a maximum of £3,000 each year to you without creating a potential Inheritance Tax liability (plus any unused balance of £3,000 from the previous tax year).

However, IHT only applies if your father was to die within seven years of making the gift and his estate was worth over £325,000 – a threshold which the government says it will freeze until 2015.

Assets and cash over this threshold will be taxed at 40%.

Married couples and civil partners can transfer their IHT allowance to a surviving partner, so if your parents are married and both still alive they could potentially increase their IHT allowance to £650,000.

HMRC adds: 'Any regular gifts you make out of your after-tax income, not including your capital, are exempt from Inheritance Tax. These gifts will only qualify if you have enough income left after making them to maintain your normal lifestyle.'